Giuliani Says Connecticut Broke Truce

By STEVEN LEE MYERS

Published: October 14, 1994

Still smarting from the Swiss Bank Corporation's decision to accept incentives to move from New York City to Connecticut, Mayor Rudolph W. Giuliani said yesterday that the city would begin aggressively trying to woo businesses out of Connecticut.

Mr. Giuliani and his Deputy Mayor for finance and economic development, John S. Dyson, said the city would no longer abide by a 1991 agreement reached between Connecticut, New Jersey and New York State to avoid bidding wars over one another's businesses and jobs.

The officials said that Connecticut already violated the agreement last month by persuading Swiss Bank to build a new North American headquarters in downtown Stamford, in what Mr. Dyson called "a shameless raid."

Mr. Giuliani's announcement came a day after the General Assembly in Hartford voted overwhelmingly to pass legislation approving the state's $120 million package of tax breaks and incentives for the bank, which is based in Zurich. Gov. Lowell P. Weicker Jr. is scheduled to sign the legislation today, a spokesman said yesterday.

At Mr. Dyson's instigation, the Giuliani administration took out large display ads in three Connecticut newspapers on Sunday denouncing the incentives for Swiss Bank as overly generous and costly for taxpapers -- partly in the hope of blocking final approval of the deal and sending a warning for the future.

With the approval now certain, the Mayor and Mr. Dyson said they would begin talks with corporations in Connecticut on incentives to relocate in New York City. They declined to specify the companies, but Mr. Dyson said that about 10 had already called his office after seeing his telephone number in the ads.

"If you start a border war, you don't really give us much choice but to fight back," Mr. Dyson said, appearing with the Mayor at City Hall. "New Yorkers are not widely considered to be patty-cakes."

Officials in Connecticut said yesterday that the state had no intention of making a policy of bidding against New York for businesses. But they accused the Mayor's office of misrepresenting the situation, since they said Swiss Bank had approached Connecticut, rather than the other way around. They said that if the city wanted a border war, Connecticut would fight and win its share of battles.

Joseph M. Cohen, a spokesman for Connecticut's Department of Economic Development, accused the Giuliani administration of amateurism by using "increasingly nasty rhetoric" and warned that a fight over corporations could hurt the economy of the entire region.

"Connecticut is a lot more cost-effective, has a higher quality of life and is more business friendly," Mr. Cohen said yesterday. "That is not to say New York City isn't one of the great places in the world for businesses to be located. It simply wasn't the choice for Swiss Bank."

Then, tweaking back, he added, "Rather than behave like pimply-faced freshmen, New York City should show the class of a sophisticated senior."

The skirmish came as Mr. Giuliani announced yesterday that the city had offered $15 million in tax breaks and incentives to Viacom Inc., the entertainment and communications giant, to keep its headquarters and 4,450 jobs in New York City for at least 15 more years.

After Viacom's recent acquisition of Paramount Communications Inc., Viacom had considered moving at least some of its office and studio space to New Jersey, Mr. Giuliani said.

The Mayor said the incentives that Viacom received were similar to those offered to six companies over the first 10 months of his administration to retain a total of 30,000 jobs -- more, he said, than the total jobs retained in the four years under Mayor David N. Dinkins.

Under Mr. Giuliani, however, the city has lost two major corporations: Swiss Bank, which plans to move 1,300 of its 1,500 jobs now in Manhattan by 1998, and Mastercard International, which announced in July that it would move its headquarters and 540 jobs to Westchester County.

Mr. Dyson said that the city's packages of incentives, which usually involve energy credits and exemptions from sales and business taxes, varied from case to case, but generally equaled about $10,000 for each job retained.

By comparison, he said, Connecticut offered Swiss Bank about $60,000 a job, though Mr. Cohen said that the incentives would not come out of taxpayers' pockets but out of tax revenue expected to be generated by the bank.

Mr. Giuliani said that until now, the city's efforts had focused on retaining jobs, particularly during the economic downturn of the late 1980's and early 1990's, when corporations sought to grow smaller or move. He said the city had already begun efforts to attract businesses from other parts of the United States and from abroad.

Mr. Dyson said the city would continue to honor the 1991 agreement not to entice businesses from New Jersey, an accord that Mr. Giuliani has publicly reaffirmed with his fellow Republican, Gov. Christine Todd Whitman.

"We never had an acquisition policy, as compared to a retention one," Mr. Dyson said. "But now that Connecticut has refused to honor our good neighbor policy, we have no choice."

Mayor Stanley J. Esposito of Stamford, which has praised celebrated Swiss Bank's relocation as a boon for its downtown, said that economic development was important to every city. But he considered New York City's response unsportsmanlike.

"You win some and you lose some," Mr. Esposito said. "In this particular case, it turned out well for Stamford and Connecticut."